Corporate Systems Publishing Pty Ltd v Lingard
[2004] WASC 265
CORPORATE SYSTEMS PUBLISHING PTY LTD & ANOR -v- LINGARD & ORS [2004] WASC 265
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2004] WASC 265 | |
| Case No: | CIV:1788/2003 | 11 NOVEMBER 2004 | |
| Coram: | PULLIN J | 16/12/04 | |
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Plaintiffs' application dismissed | ||
| B | |||
| PDF Version |
| Parties: | CORPORATE SYSTEMS PUBLISHING PTY LTD (ACN 009 412 622) NICK CHRISTOU KEITH GRAEME LINGARD STANTON PARTNERS AUSTRALASIA PTY LTD (ACN 085 103 206) STANTON ACCOUNTANTS & ADVISORS PTY LTD (ACN 085 059 909) NEIL KEVIN JOYCE DEMANDEM HOLDINGS PTY LTD (ACN 009 258 664) GLENLEA ENTERPRISES PTY LTD (ACN 065 274 544) |
Catchwords: | Practice and Procedure Application to reopen application for summary judgment Previous application refused Circumstances in which interlocutory order will be reopened No new point of principle |
Legislation: | Nil |
Case References: | Clairs Keeley (a firm) v Treacy [2004] WASCA 277 Todd v Novotny [2000] WASC 308 Turner v Bulletin Newspaper Co Pty Ltd (1974) 131 CLR 69 21st Century Promotions Australia Pty Ltd v Telstra Corp Ltd [2000] SASC 353 Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 DA Christie Pty Ltd v Baker [1996] 2 VR 582 Donaghy v Wentworth Area Health Service (No 2) [2003] NSWSC 814 Dresler v Mrish [1999] NSWSC 523 Esplanade Hotel Busselton Pty Ltd v Graywinter Properties Pty Ltd, unreported (Master Sanderson); Library No 970656; 28 November 1997 Jackson v Goldsmith [1950] 81 CLR 446 Jones v Toben [2002] FCA 1150 Mann v Capital Territory Health Commission (1982) 148 CLR 97 Nokia Corp v Truong [2004] FCA 1109 Servcorp (Australia) Pty Ltd v Abgarus Pty Ltd (1995) 38 NSWLR 281 Water Authority of Western Australia v AIL Holdings Pty Ltd (No 2) (1992) 10 WAR 233 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiff
NICK CHRISTOU
Second Plaintiff
AND
KEITH GRAEME LINGARD
First Defendant
STANTON PARTNERS AUSTRALASIA PTY LTD (ACN 085 103 206)
Second Defendant
STANTON ACCOUNTANTS & ADVISORS PTY LTD (ACN 085 059 909)
Third Defendant
NEIL KEVIN JOYCE
Fourth Defendant
DEMANDEM HOLDINGS PTY LTD (ACN 009 258 664)
Fifth Defendant
(Page 2)
- GLENLEA ENTERPRISES PTY LTD (ACN 065 274 544)
Sixth Defendant
Catchwords:
Practice and Procedure - Application to reopen application for summary judgment - Previous application refused - Circumstances in which interlocutory order will be reopened - No new point of principle
Legislation:
Nil
Result:
Plaintiffs' application dismissed
Category: B
Representation:
Counsel:
First Plaintiff : Mr P G Clifford & Mr A P Rumsley
Second Plaintiff : Mr P G Clifford & Mr A P Rumsley
First Defendant : Mr M L Bennett & Mr M A MacLennan
Second Defendant : Mr M L Bennett & Mr M A MacLennan
Third Defendant : Mr M L Bennett & Mr M A MacLennan
Fourth Defendant : Mr M L Bennett & Mr M A MacLennan
Fifth Defendant : Mr M L Bennett & Mr M A MacLennan
Sixth Defendant : Mr M L Bennett & Mr M A MacLennan
Solicitors:
First Plaintiff : Alan Rumsley
Second Plaintiff : Alan Rumsley
First Defendant : Bennett & Co
Second Defendant : Bennett & Co
(Page 3)
- Third Defendant : Bennett & Co
Fourth Defendant : Bennett & Co
Fifth Defendant : Bennett & Co
Sixth Defendant : Bennett & Co
Case(s) referred to in judgment(s):
Clairs Keeley (a firm) v Treacy [2004] WASCA 277
Todd v Novotny [2000] WASC 308
Turner v Bulletin Newspaper Co Pty Ltd (1974) 131 CLR 69
Case(s) also cited:
21st Century Promotions Australia Pty Ltd v Telstra Corp Ltd [2000] SASC 353
Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334
DA Christie Pty Ltd v Baker [1996] 2 VR 582
Donaghy v Wentworth Area Health Service (No 2) [2003] NSWSC 814
Dresler v Mrish [1999] NSWSC 523
Esplanade Hotel Busselton Pty Ltd v Graywinter Properties Pty Ltd, unreported (Master Sanderson); Library No 970656; 28 November 1997
Jackson v Goldsmith [1950] 81 CLR 446
Jones v Toben [2002] FCA 1150
Mann v Capital Territory Health Commission (1982) 148 CLR 97
Nokia Corp v Truong [2004] FCA 1109
Servcorp (Australia) Pty Ltd v Abgarus Pty Ltd (1995) 38 NSWLR 281
Water Authority of Western Australia v AIL Holdings Pty Ltd (No 2) (1992) 10 WAR 233
(Page 4)
1 PULLIN J: The plaintiffs have made an application for an order that the second defendant pay $214,245.54. They also seek also a declaration that the second plaintiff is entitled to be paid 50 per cent of professional fees collected by the second defendant in respect to professional work undertaken and supervised by the second plaintiff in the business carried on by the second defendant within 14 days of the end of the calendar month within which such fees are collected until further order of the court.
2 On 12 December 2003 I dismissed an application for summary judgment by the plaintiffs. The plaintiffs now submit that they should be permitted to "re-open" the application which led to the decision of 12 December 2003 to obtain the orders now sought.
3 It is therefore necessary that I set out the background to this dispute. I repeat what I said in my reasons for decision of 12 December 2003.
4 The dispute concerns what was, before 1998, an accounting partnership between Messrs Christou, Lingard and Joyce, who are three of the parties to this litigation. In 1998, they restructured the practice by transferring the partnership goodwill to the second defendant, Stanton Partners, and licensing it to conduct the practice for a fee. Stanton Partners then earned the income of the practice.
5 Stanton Partners was the trustee of a trust, and the beneficiaries included the three former partners, each of whom held 10 of 30 capital units. These units entitled them to equal payments of the net income of the trust. Discretionary units were also issued to the family trusts of the three individuals. The third defendant provided services to Stanton Partners. The third defendant was also trustee of a trust called the NFI Trust. The beneficiaries of this trust were the family trusts of the three individuals.
6 In short, the second plaintiff, Mr Christou, complains that nearly $1.9 million was paid out of the Stanton Partners Trust otherwise than in accordance with the terms of the trust deed. This is an application for summary judgment for a declaration to that effect, and for orders to restore the trust property under s 92 of the Trustees Act.
7 After the practice had continued for a time under the new structure, there was a falling out between the three individuals. Lingard and Joyce complained that Christou was not earning enough fees. Christou considered there were valid reasons why this was so. Nevertheless, the existence of the unhappiness between them led them to consider selling the practice as a going concern and to adjust income entitlements.
(Page 5)
8 The defendants refer to two agreements which they say are relevant to the dispute. The first was in April 2001. The second was in January 2002. As to the April 2001 agreement, Mr Joyce deposes that Mr Christou agreed to a reduction in his profit share to 50 per cent of his fees collected, backdated to February 2001. Mr Joyce also says that it was agreed that if Mr Christou's maintainable collections reached $100,000 per month, then he would revert to an equal third-share of profits.
9 This agreement was not formally documented, but the fact and substance of it was referred to in a letter from Mr Christou's solicitors, McKie and Associates. This letter read, in part:
"We are instructed that in April 2001, our client was coerced into agreeing to drawings representing 50% of his collection and, under protest, was from the period February 2001 to September 2001 (inclusive) paid 50% of such collections."
10 A memorandum dated 14 December from Mr Joyce to a member of staff, with a copy to Mr Christou and a copy to Mr Lingard, also referred to the agreement. This memo read, in part:
"Upon receipt of the NFI Superannuation Fund accounts and tax returns the partnership will pay Mr. Christou's October and November 2001 income share based on his agreement to accept 50% of his cash collections. This amount is around $50,000.
11 Mr Joyce has also exhibited some notes in Mr Christou's handwriting which refer to the April 2001 agreement.
12 A proposal to sell the practice by June 2002 was then discussed by the three individuals. Mr Christou, according to Mr Joyce, said he would consider a reduction of his unit-holder entitlement on sale of the practice when an offer to purchase the practice was made.
13 An offer to purchase the second defendant was made by a third party on 15 January 2002. The parties then circulated a document detailing the proposed split of the proceeds of the sale of the accountancy practice, and also a proposed split of proceeds for two projects which Mr Christou was involved in. Negotiations took place.
14 Then, on 21 or 22 January 2002, Mr Christou said he wished to resolve all past disputes. This led to the January 2002 agreement, which Mr Joyce said came about in this way: on 24 January 2002, a combined board meeting for the second and third defendants was convened.
(Page 6)
- Mr Lingard, Mr Joyce and Mr Christou were present. According to Mr Joyce, there were discussions, following which an agreement was reached between Mr Lingard, Mr Joyce and Mr Christou regarding past and future entitlements, and Mr Lingard undertook to document the agreement and arrange for it to be executed by all directors.
15 The minutes of the board meeting for the second and third defendants recorded this. A short agreement was then prepared and signed by the three individuals. It attached "an analysis of equity position" which had been discussed between the parties.
16 There is an issue between the parties as to whether the January 2002 agreement was an agreement conditional upon the sale of the practice, or whether it operated even if there were no sale. It is not necessary for me to set out all the terms of the agreement. Suffice it to say that it is arguable that there are some provisions which refer to what would happen if the practice were sold, and other provisions which operated even if the practice were not sold.
17 The plaintiffs' case for summary judgment brought in 2003 depended upon close attention being paid to the terms of the Stanton Partner's trust deed and to the fact that the payments of approximately $1.9 million to Joyce and Lingard were not authorised in accordance with the terms of the trust deed. The accounting records refer to the payments in 2001 and 2002 as being either salary to the two individuals or partner's salary.
18 The plaintiffs in the summary judgment application last year pointed to the fact that a payroll tax return for the year ended 30 June 2002 revealed nothing reflecting the payments which are attacked by the plaintiffs. As a result, the plaintiffs contended that this shows that the payments were not salary. The return is pointed to as evidence of the fact that there were non-authorised payments in breach of trust.
19 The plaintiffs submitted in the summary judgment application last year that there was no resolution of a meeting of the board of Stanton Partners authorising the payments, and also pointed to the fact that there is evidence that these payments did not go to the individuals at all but were, in fact, payments made to the family trusts of the two individuals. This latter point does not strike me as significant. A full airing of the evidence might reveal that the payments to the individuals were assigned to the family trusts or that instructions were given by the individuals to pay the family trust. An inference to either effect may be drawn from the evidence which has been put forward in the affidavits.
(Page 7)
20 In short, the issue between the parties is this: the plaintiffs say that the impugned payments were payments in breach of trust. The defendants, on the other hand, say that these payments were not payments in breach of trust but payments agreed to by the three individuals, who acted in their capacities as beneficiaries of the capital units, directors of the trustee companies and trustees of the family trust companies.
21 There were also some side issues to be explored. In my reasons for decision on the summary judgment application, I mentioned one of them, which was that Mr Christou alleged that there was misrepresentation inducing the January 2002 agreement. One way of viewing the events was that there was a variation of the trust by the beneficiaries entitled to the income of the Stanton Partners Trust and by the trustee of that trust or, alternatively, that Stanton Partners did authorise the payments.
22 As a result of that background and those reasons, I concluded in my decision on the summary judgment application that the defendants had raised triable issues. As I said in those reasons:
"This is a complex dispute concerning a corporate and trustee structure which was controlled by the three individuals and run by them without proper regard to the requirements or terms of the constitution documents. The facts in this case are not all agreed or settled, and questions about the capacity in which persons were acting in the transactions which took place are matters for investigation at trial."
23 As a result, I dismissed the application for summary judgment and granted the defendants unconditional leave to defend.
24 In the writ the plaintiffs claim they are entitled to one-third of the profits earned by the Stanton Partners Trust which conducts the former partnership business and the NFI Trust which is a service provider to the second defendant.
25 The plaintiffs now contend that even on the January 2002 agreement, if it be an enforceable agreement now operating between the parties, Mr Christou, the second plaintiff, is entitled to a sum of money equal to one-half of the fees rendered by him and collected.
26 As a result, the plaintiffs seek to vary the order dismissing the summary judgment application. It is not apt to refer to this application as one for a variation of the existing order. This is in effect a fresh application for summary judgment.
(Page 8)
27 I will deal with the issue about whether or not this application should be entertained at all later in these reasons, but before doing that, I will turn to the January 2002 agreement and refer in particular to cl 1(vi). It reads:
"Mr Christou will be entitled to a profit entitlement equalling 50% of his professional fee collections until such time as the practice is sold. If Mr Christou attains average collections over a 12 month period of $100,000 per month, then Mr Christou reverts to a profit entitlement from that point equal to Mr Joyce and Lingard at his discretion."
28 In effect, it is submitted on behalf of the second plaintiff, that if the January 2002 agreement is enforceable as the defendants contend, then Mr Christou is entitled to 50 per cent of his professional fee collections to be paid monthly. Mr Christou in effect submits that he is entitled to either a salary or alternatively drawings against profit amounting to 50 per cent of his professional fee collections. My provisional view is that cl 1(vi) contemplates an ascertainment of profits and then from those profits Mr Christou would take a share, being an amount equal to 50 per cent of his professional fee collections and the balance of the profits would then be shared by Mr Joyce and Mr Lingard. I say that because cl 1(vi) says that Mr Christou's entitlement is a "profit entitlement". I note that McKie and Associates in the letter referred to earlier, refers to an agreement concerning "drawings" but this was a reference to the April 2001 agreement.
29 I am not able to say on the evidence before me at the moment, exactly what the arrangement was for the time for ascertainment of profits under this agreement. Normally, of course, the profit would be calculated at the end of each financial year.
30 There are a number of points advanced by the first, fourth, fifth and sixth defendants in opposition to this application but it is not necessary to deal with all of them.
31 One of the submissions made by these defendants was that the claim now made if it is open, was arguable at the time of the first application and should not now be entertained.
32 In Turner v Bulletin Newspaper Co Pty Ltd (1974) 131 CLR 69 at 96-7, Jacobs J said that an interlocutory order may be reviewed by the court at any time before the final disposal of the action. The court has a wide discretion to entertain a renewed application: Todd v Novotny [2000] WASC 308 at [20]. On the other hand a party will not usually be
(Page 9)
- permitted to renew an application simply to see if a different outcome might be achieved by a second hearing. It is a general rule of practice that an interlocutory order made after a hearing at which each party had the opportunity to put its case, should not be disturbed upon a subsequent application unless there is a need to accommodate a change of circumstances or unless additional evidence has since become available which could not reasonably have been put before the court on the hearing of the original application. Litigants who fail to put forward their best cases in interlocutory applications are unlikely to be given another chance to obtain the order originally sought. See Clairs Keeley (a firm) v Treacy [2004] WASCA 277 .
33 The plaintiffs contend that the order dismissing the claim for summary judgment should be re-opened, first, because, if the January 2002 agreement is in force as the defendants contend in its defence, then some money is due under the agreement, and secondly, because the second defendant has failed to make payments by way of drawings since January 2004.
34 The defendants do not admit that the money now claimed is due. The plaintiffs make a calculation of what they say is due under the January 2002 agreement. I have already expressed the provisional opinion that the January 2002 agreement provides for a share of profits rather than a salary or drawings.
35 In any event, the claim which is now put forward, could have been put forward during the summary judgment application heard last year. In exhibit NC1 to Mr Christou's affidavit sworn 3 September 2004, it is shown that in December 2003, Mr Christou claims that he was due $181,376.90 based on his calculation of what was due under the January 2002 agreement. This of course includes disbursements, and the plaintiffs agree that disbursements should not be included. Nevertheless the plaintiffs could have pursued the argument they now pursue for the balance after deduction of disbursements, in 2003 when the summary judgment application was heard. The plaintiffs say that this argument was not advanced then because some drawings were being allowed against profits on a fairly regular basis up until December 2003 and that only after the summary judgment application was dealt with, did these payments cease. The plaintiffs were prepared out of expediency to proceed in the expectation that some drawings against profit would continue to be paid. In my opinion, the fact that drawings are not now being paid is not a relevant change of circumstances. The plaintiff was in 2003 making a summary claim for his legal entitlement. It is undesirable to save up
(Page 10)
- points for later argument. It is vexatious. It results in extra costs being incurred and distracts the parties from the objective of the orderly disposal of the dispute by mediation or trial. In my opinion the plaintiffs' arguments are argument which could have been dealt with in 2003. In any event, as I have already said, the plaintiffs' submissions that cl 1(vi) provides for drawings or salary, is a submission I do not accept.
36 In addition, the claim the plaintiffs now make is a claim based on moneys due under an agreement - the January 2002 agreement - which the defendants set up in their defence. It is not a claim under the agreements and trusts relied on by the plaintiffs in the statement of claim. The plaintiffs deny that the January 2002 agreement is on foot. Summary judgment cannot be sought for a sum of money which is to be calculated under the terms of an agreement which the plaintiffs deny is on foot.
37 The defendants also resisted the application by contending that cl 2 of the January agreement excluded Mr Christou's right to profit entitlements under cl 1(vi) for the period before January 2002. Clause 2 of the January 2002 agreement reads:
"Mr Nick Christou will take over all of the practice's interest in the company e-Genius in settlement of Mr Christou's past claims of profit entitlements other than the entitlement referred to at 1(vi). The transfer of the firm's interest in e-Genius shall take place immediately upon signing of this Agreement and is effective regardless as to whether a sale of the practice eventuates. Mr Christou will be responsible for Stamp Duty and related costs associated with the transfer. Upon transfer of the shares, Mr Christou will take over e-Genius as a client for the consideration of $1 and Nick Christou will be entitled to all future benefits from that client relationship."
38 The plaintiffs contend that the takeover by Mr Christou of the e-Genius interest was a settlement of all past claims of profit entitlements, but not the entitlement referred to in cl 1(vi) - ie the profit entitlement equalling 50 per cent of professional fee collections. My provisional view is that the plaintiffs' interpretation is correct. The phrase "past claims of profit entitlements other than the entitlement referred to at 1(vi)" seems to me to have that meaning. I should add that my view is provisional because it has not even yet been decided whether the January 2002 agreement is still on foot.
39 It is unnecessary to deal with other points which were argued.
(Page 11)
40 I dismiss the plaintiffs' application.
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